29 May 2014
FUTURE PLC
Proposed disposal of Sport titles and Craft titles for up to £24m and proposed transfer of listing category
Future plc (LSE: FUTR, "Future," the "Group"), the international media group and leading digital publisher, is pleased to announce that it has agreed to sell certain of its Sport titles and the Craft titles (the "Portfolio") to Immediate Media Company Bristol Limited ("Immediate", the "Purchaser") for a total consideration of up to £24m (the "Proposed Disposal").
In addition, the Board of Future is today announcing its intention to seek shareholder approval to transfer the Company's listing category from a "premium listing (commercial company)" on the Official List and into the category of a "standard listing" on the Official List (the "Proposed Transfer").
Highlights
· Sale of Sport and Craft titles to Immediate for a total consideration of up to £24 million comprising up to £22 million in cash and £2 million of magazines subscriptions deferred revenue to be retained by Future
· Simplifies Future's business and supports focus on consumer technology markets
· Realises significant funding to reduce leverage and to aid restructuring activities
· Transfer to standard listing is in line with the stated strategy of reducing costs and increasing flexibility for the business
Both the Proposed Disposal and the Proposed Transfer are subject to shareholder approval. A circular (the "Circular") will be distributed as soon as practicable giving notice of a general meeting to be convened to seek the approval of Future's shareholders for the Proposed Disposal and the Proposed Transfer.
Zillah Byng-Maddick, CEO of Future, said: "The disposal of the portfolio of Sport and Craft titles to Immediate Media for up to £24m is a key step in the new strategy to transform Future into a more simplified business, focussing on core verticals with an emphasis on the consumer technology market. The disposal titles are well managed and successful parts of the business and they will thrive under their new ownership."
Enquiries
Future plc |
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Zillah Byng-Maddick, Chief Executive |
+44 (0) 20 7042 4433 |
Chris Taylor, Director of Communications |
+44 (0) 20 7042 4033 |
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Numis Securities Limited (Financial Adviser, Sponsor and broker to Future) |
+44 (0) 20 7260 1000 |
Lorna Tilbian / Nick Westlake / Mark Lander |
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Brunswick Group (PR adviser to Future) |
+44 (0) 20 7404 5959 |
Jon Coles / Andy Rivett-Carnac |
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Note to editors
Future plc is an international media group and leading digital business, listed on the London Stock Exchange (symbol: FUTR). Future has been named Consumer Digital Publisher of the Year for three years in a row by the Association of Online Publishers (2011, 2012, 2013) and has been named the Professional Publishers Association Digital Publisher of the Year for two consecutive years (2012, 2013).
Future has operations in the UK, US and Australia creating more than 200 publications, apps, websites and events. It holds market-leading positions in Technology, Games, Guitar, Creative and Sport & Auto sectors. It attracts more than 58 million monthly global unique users to its websites. Future has developed its own app-creation software, FutureFolio. It produces over 100 digital editions, and has sold over 5 million digital issues in the last year.
Numis Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Future Plc and no one else in connection with the matters referred to in this announcement and apart from the responsibilities and liabilities, if any, which may be imposed on Numis Securities Limited by the Financial Services and Markets Act 2000 and the regulatory regime established thereunder, Numis Securities Limited will not be responsible to anyone other than Future Plc for providing the protections afforded to clients of Numis Securities Limited or for providing advice in relation to the matters referred to in this announcement.
Forward-looking statements
Certain statements in this announcement are forward-looking. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, the Group can give no assurance that these expectations will prove to be correct. Because these statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by these forward-looking-statements.
The Group assumes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise except as required by the rules of the London Stock Exchange, the Listing Rules, the Disclosure and Transparency Rules or any other applicable law.
Disposal of Sport and Craft titles and proposed transfer of the Company's listing category on the Official List from Premium to Standard
The Board of Future Plc ("Future" or "the Company") announces today that it has entered into a conditional binding agreement to sell certain Sport and Craft titles for a total consideration of up to £24 million. Immediate will pay £20 million in cash for the Portfolio on completion of the Proposed Disposal and the Company will also be entitled to retain approximately £2 million of magazine subscriptions deferred revenue. A further sum of up to £2 million will be paid to the Company on an unconditional "Phase I" clearance by the Competition and Markets Authority ("CMA"). In the event that the CMA requires a divestment of any Craft title to address any competition concerns, Immediate will be obliged to sell such titles and if the proceeds of such sale (less certain agreed costs) are less than the agreed values attributed to such titles, such shortfall shall be deducted from the £2 million deferred consideration and the balance (if any) will be paid over to Future.
The Proposed Disposal is of sufficient size to constitute a Class 1 transaction under the Listing Rules and is, therefore, conditional upon the approval of the Company's shareholders. The approval of at least 50.1 per cent. of the Company's shareholders at a general meeting to be convened in due course will be required.
The Board of Future also announces today that it intends toseek authority to transfer the Company's listing category on the Official List. The Company's shareholders will be asked to vote on the proposed transfer of the Ordinary Shares out of the category of a "premium listing (commercial company)" on the Official List and into the category of a "standard listing" on the Official List.
Under the Listing Rules, the Proposed Transfer requires the Company first to obtain the prior approval of the Company's shareholders. The approval of at least 75 per cent of the Company's shareholders at a general meeting to be convened in due course will be required.
The Proposed Disposal and the Proposed Transfer are not conditional on each other.
The Circular will be distributed as soon as practicable giving notice of a general meeting convened to seek the approval of the Company's shareholders for the Proposed Disposal and the Proposed Transfer. Further information is included below.
Information on the Portfolio
Sport titles
The Sport titles (the "Sport Titles") represent the production and distribution of Sport Magazines, including the titles Procycling, Cycling Plus, Mountain Biking UK, What Mountain Bike, Urban Cyclist and On Your Bike and the operation of the Sport Websites, including the websites bikeradar.com, cyclingnews.com, onyourbike.org and bikely.com.
Craft titles
The Craft titles (the "Craft Titles") represent the production and distribution of Craft Magazines, including the titles Mollie Makes (UK), Mollie Makes (US), The Knitter, Simply Knitting, Simply Crochet, Love Patchwork & Quilting, CrossStitcher, CrossStitch Collection, PaperCraftInspirations, Your Family Tree and The Simple Things, and the operation of Craft Websites including the websites molliemakes.com, theknitter.co.uk, simplyknitting.co.uk, simplycrochetmag.co.uk, crossstitchermagazine.co.uk, papercraftinspirationsmagazine.co.uk, lovepatchworkandquilting.com, yourfamilytreemag.co.uk and thesimplethings.com.
In the year ended 30 September 2013, the Portfolio generated operating profit (excluding any allocation of central Group and corporate costs) of £6.4 million on turnover of £23.7 million. The gross assets of the Portfolio as at 31 March 2014 were approximately £0.6 million, excluding any allocation of goodwill.
Further financial information on the Portfolio will be set out in the Circular.
Background to and reasons for the Proposed Disposal
As detailed in today's announcement of the Company's interim results for the half-year ended 31 March 2014, the Board has determined that the Group's strategy is to focus on core verticals, with an emphasis on consumer technology and the on-going transformation of the Group will be best served through the disposal of the Portfolio.
Principal terms and conditions of the Proposed Disposal
The Company and its subsidiary Future Publishing Limited has entered into a binding asset purchase agreement (the "Asset Purchase Agreement") with Immediate for the sale and purchase of the Portfolio comprising the Sport Titles and the Craft Titles for a total aggregate consideration of up to £24 million. Under the terms of the Asset Purchase Agreement:
· Immediate will pay £20 million in cash for the Portfolio on completion of the Proposed Disposal and the Company will also be entitled to retain approximately £2 million of magazine subscriptions deferred revenue. A further sum of up to £2 million will be paid to the Company on an unconditional "Phase I" clearance by the CMA. In the event that the CMA requires a divestment of any of the Craft Titles to address any competition concerns, Immediate will be obliged to sell such titles and if the proceeds of such sale (less certain agreed costs) are less than the agreed values attributed to such titles, such shortfall shall be deducted from the £2 million deferred consideration due to Future and the balance (if any) will be paid over to Future.
· The transaction is a Class 1 transaction for Listing Rule purposes and therefore is conditional on shareholder approval. Assuming that shareholder approval is obtained, the Company expects to complete the transaction during the summer of 2014.
· The Company has agreed to pay a break fee to Immediate of £150,000 (inclusive of VAT) in certain circumstances. These include inter alia if the Company's Shareholders do not vote in favour of the transaction and if the Board does not recommend the transaction or withdraws its recommendation. Further details of the terms of the transaction will be included in the Circular to be published in due course.
Use of proceeds and financial effects of the Proposed Disposal
The cash proceeds arising from the Proposed Disposal will be used in part to reduce the Group's existing external borrowings and to fund certain of the costs relating to the restructuring activities of the Group.
The Group is currently in discussions with its lending banks with a view to putting in place a new working capital facility (including a resetting of covenants to reflect the size of the Group following completion of the Proposed Disposal) to support the continued rationalisation and development of the on-going business. The Board expects to have a new committed facility in place by the time the Circular is published.
Background to and reasons for the Proposed Transfer
The Board believes the Proposed Transfer would align the Company's regulatory responsibilities and associated costs thereof with the Company's size. The Board has concluded that it is appropriate to transfer the listing of the Ordinary Shares of the Company from the category of "premium listing (commercial company)" on the Official List and into the category of "standard listing" on the Official List. The Board believes this transfer will reduce administrative costs generally and increase flexibility.
Under the Listing Rules, the Proposed Transfer requires the Company first to obtain the prior approval of the Company's shareholders. The approval of at least 75 per cent. of the Company's shareholders at a general meeting to be convened in due course will be required.
